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Dairy, Cereals Push Food Prices Up in February

GLOBAL - Rising world prices for staple grains and dairy products more than offset lower prices for vegetable oils, leading global food commodity prices up in February.

The FAO Food Price Index averaged 170.8 points in February, up 1.1 per cent from the previous month and now just 2.7 per cent below its year-ago level, FAO reports.

FAO's Food Price Index is a trade-weighted index tracking international market prices for five major food commodity groups.

The Cereal Price Index, representing wheat, rice and the main coarse grains including maize, increased 2.5 per cent, posting its second consecutive notable monthly rise, with unfavourable weather adversely affecting the outlook for winter wheat in the United States of America and maize in Argentina.

FAO also lowered its projections for worldwide wheat harvests this year, while noting that inventory levels are poised to hit a record high.

The Dairy Price Index rose 6.2 per cent in February as international price quotations rose for butter, cheese and whole and skim milk powders. Strong global demand coupled with lower than expected milk output in New Zealand drove the change.

The Meat Price Index was broadly unchanged, as poultry meat prices fell for the fourth month in a row, offsetting a rise in bovine meat price quotations.

The FAO Vegetable Oil Price Index declined 3.1 per cent to reach its lowest level in 19 months amid prospects of a growing global production surplus in the current year. Palm oil prices dropped the most, reflecting rising inventories in Malaysia and Indonesia, while expectations of record soy crushings in the US weighed on soybean quotations.

The FAO Sugar Price Index declined 3.4 per cent, reaching a two-year low, as major producers such as Thailand and India continued to expand production and market participants brace for a sharp rise in output in the European Union due to higher beet yields coupled with larger plantings after the removal of output quotas last year.